TRUST IN TOMORROW – the evolution of underwriting –
Matias Bøe Olsen, Executive Underwriter, Skuld
The maritime industry is manoeuvring towards the destination of decarbonisation, but the unpredictable route, and ever-increasing complexity of the journey, creates major challenges for all ocean stakeholders.
Skuld’s executive underwriter Matias Bøe Olsen assesses how underwriters can help create certainty and trust in tomorrow in uncertain times.
How do you assess risks for shipowners looking at 25-30-years vessel lifecycles when no one seems to know what’s going to happen tomorrow? How will the industry hit regulatory targets without a ‘silver bullet’ fuel solution? Why are you smiling Matias?
Matias Bøe Olsen has remarkable poise and maturity for someone comparatively new to the shipping industry. The big questions don’t appear to derail him; simply putting him on track to deliver answers rooted in understanding, research and, with his education in marine engineering, a solid appreciation of technical considerations.
“We need to take things one step at a time,” he says calmly. “Sustainability is a challenge, of course, but specialist underwriters can help. In fact, I’d go as far to say that the function of underwriting is actually sustainability in practice.”
Responsible role
What Matias, an Executive Underwriter with Skuld’s sustainability group, means by this is manifold. Firstly, there’s the ‘bread and butter’ aspects of assessing risk and setting P&I premiums that are commensurate with any potential third-party liabilities – for example cleaning up an oil spill, or safely removing a wreck. So, there’s clear environmental responsibility.
The premiums also have to be sustainable to in terms of Skuld’s operations, and its members’ businesses, while providing an adequate safety net to meet all future claims.
And this is where, from a sustainable perspective, things get a little complicated.
Despite the fact that Skuld has over 125 years’ experience in assessing maritime’s ever-evolving risk picture, the situation the industry, and indeed the world, currently faces is unprecedented. A new generation of expertise is required.
Physical threats
“The climate is changing, and so is risk,” notes Matias. “We now have to consider two categories of risk – physical risk and transitional risk.”
In the past, assessing physical risk was comparatively “straightforward” in an environment of relative stability, he says, but the rapid warming of the planet disrupts established risk models. Now, he explains, it’s necessary to consider a wide range of climate scenarios before coming to any conclusions. “The risk picture changes in accordance to future global warming projections,” Matias comments. “The higher the increase above the 1850-1900 baseline, as set by the Intergovernmental Panel on Climate Change (IPCC), the greater the frequency and intensity of ‘extreme’ events. So, for example, if the world warms up by 2 degrees as opposed to 1.5 degrees, the probability and consequence (hence the risk) of an event that could impact upon our members’ operations, will increase.
“That’s something we have to constantly track and understand to be able to provide optimal levels of cover.”
Defining developments
The other side of the coin, transitional risk, is no less important.
With the lack of any aforementioned silver bullet solution to enable a truly green maritime industry, owners are confronted with a myriad of (often
The Report • June 2023 • Issue 104 | 81
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